Illinois Passes Predatory Lending Laws

The month of August has been a tipping point for the stock market. Sparked by worries associated with subprime lending practices and rising home foreclosures, Wall Street investors and analysts have spent the entire month in a tizzy waiting to see how big the bubble bursting will be when the shakeout is complete. At the same time, families are losing their homes at record numbers and financial institutions are developing stricter guidelines for mortgages in a time when subprime mortgages are going the way of the wind. With all of this chaos, states are beginning to step in and develop policies to protect home buyers who have been the victim of predatory lending practices and watching their homes and dreams go out to the dogs.

After a failed policy move earlier this year that saw an uprising in cries of racism, the Illinois state legislature moved again this summer to write a policy that will in effect be educational in nature, but with the hope that education will lead to better decisions about mortgage undertaking. The old statute which was only in effect for a couple of months, was modified, having consumer counseling agencies invest at least an hour, possibly two with anyone seeking an unconventional mortgage loan. These loans are those that are geared towards people with higher credit risk or financial instability. The loans with such concerns as upfront payment penalties and interest-only payment options have been a major part of the foreclosure debate as people with the highest credit risk are defaulting at alarming rates.